DOJ Opinion No. 126, s. 1981

DOJ OPINION NO. 126 , s. 1981 September 8, 1981 The President & General Manager Government Service Insurance System Manila Sir : This has reference to your request for opinion on "whether or not the Government Service Insurance System (GSIS) still enjoys exemption from all taxes, assessments, fees, charges or duties of all kinds as provided in Section 33 of P.D. No. 1146 [the Revised GSIS Charter], in the light of Section 23 of P.D. No. 1177 which requires government-owned or controlled corporations to pay income taxes, customs duties and other taxes and fees as are imposed under revenue laws". dctai Subject to the extended discussion hereunder, we answer your query in the affirmative. Section 33 of the GSIS Charter states insofar as is pertinent: "SEC. 33. Exemption from Tax, Legal Process and Lien . It is hereby declared to be the policy of the State that the actuarial solvency of the funds of the System shall be preserved and maintained at all times and that the contribution rates necessary to sustain the benefits under this Act shall be kept as low as possible in order not to burden the members of the System and/or their employees. Taxes imposed on the System tend to impair the actuarial solvency of its funds and increase the contribution rate necessary to sustain the benefits under this Act. Accordingly, notwithstanding any laws to the contrary, the System, its assets, revenues including all accruals thereto, and benefits paid, shall be exempt from all taxes, assessments, fees, charges or duties of all kinds. These exemptions shall continue unless expressly and specifically revoked and any assessment against the System as of the approval of this Act are hereby considered paid." (Emphasis supplied.) Section 23 of P.D. 1177, on the other hand, reads: "SEC. 23. Tax and Duty Exemptions . All units of government, including government-owned or controlled corporations, shall pay income taxes, customs duties and other taxes and fees as are imposed under revenue laws :provided, that organizations otherwise exempted by law from the payment of such taxes/duties may ask for a subsidy from the General Fund in the exact amount of taxes/duties due; provided, further, that a procedure shall be established by the Secretary of Finance and the Commissioner of the Budget, whereby such subsidies shall be considered as both revenue and expenditure of the General Fund." In previous opinions, this Ministry has ruled that section 23, supra , has the effect of withdrawing from government-owned and controlled corporations the tax-exemption privileges conferred upon them by their respective charters, it being a clear and unequivocal expression of the legislative intent to subject all units of government, including government-owned and controlled corporations, to the payment of all taxes, duties and fees imposed under revenue laws; and that in this regard, no distinction should be made between government corporations which were already enjoying the tax-exemption privilege at the time P.D. 1177 took effect and those to which such exemption are subsequently granted since such distinction would frustrate the objective of the law. (See Opinions, No. 133, s. 1977 and No. 98, s. 1979) prcd However, it bears emphasis that section 33 of the GSIS Charter,,in a clear and peremptory tone, requires that the exemptions (from taxes, assessments, fees, charges or duties) granted thereunder to the GSIS "shall continue unless expressly and specifically revoked".Section 33 itself if categorical in stating that the intention behind such requirement of express and specific revocation is to promote the declared state policy of preserving and maintaining "at all times" "the actuarial solvency of the funds of the System" and keeping "as low as possible" "the contribution rates necessary to sustain the benefits" granted under the GSIS Act, which objectives cannot be attained if taxes are imposed upon the GSIS. We have examined P.D. No. 1177, especially its repealing clause, but we are unable to find any provision therein which can reasonably be interpreted as having expressly revoked, or even modified, the tax exemptions to the GSIS under Section 33 of its charter, supra , It is true that the repealing clause of PD 1177 found in Section 90 provides that all laws and parts of laws in conflict or inconsistent therewith are thereby repealed. However, the recognized rule in such a mode of repeal is that the earlier law in order to be deemed repealed, must actually be inconsistent, repugnant and irreconcilable with the repealing act (Crawford, Statutory Construction, p. 194, State vs. Standard Oil Co., 16 SW 2d 581; Nettles vs. Carson, 187 p. 799). Furthermore, as is usual in the operative relationship between a general legislation (section 23, PD 1177) and a special enactment (section 33, PD 1146) both can be given concurrent force inasmuch as the latter is construed as an exception to, or a qualification of, the former. Applying the foregoing aspects to the instant case, the correct interpretation of section 23 of P.D. 1177 vis-a-vis Section 33 of P.D. 1146 should be that the legislative authority, in providing in PD 1177 for the withdrawal of tax-exemption privileges from all government agencies and instrumentalities, had intended to exempt therefrom the tax immunity which it had conferred upon the GSIS in section 33 of PD. 1146. It is presumed that when PD 1177 was in the process of enactment, the lawmaker had been aware of the provision of section 33 of PD 1146 that the GSIS tax exemption would "continue unless expressly and specifically revoked (See US vs. Palacio, 33 Phil. 208), especially considering that P.D. 1177 was promulgated a mere two months after the issuance of PD 1146. Therefore, the failure to provide for such explicit revocation in PD 1177 should be deemed as indicative of the legislative intent to retain the tax exemption privilege in question. LLjur Accordingly, we reiterate our affirmative reply to the query as hereinabove set forth. Very truly yours, (SGD.) RICARDO C. PUNO Minister of Justice